Tribal gaming on front-burner with sports betting taking off

If trends continue, the Passamaquoddy Tribe would receive just under $25 million for the two reservations at Sipayik and Indian Township for the first year.
the logo for Draftkings is seen on the screen of a phone, tablet and laptop.
DraftKings generated most online sports betting revenue during the first two months, with more than $65 million in gross receipts.

Tribal gaming is back on the front-burner in Maine, with the four tribes having partnered with sports betting operators late last year and already raking in significant revenues.

Through its partnership with DraftKings, the Passamaquoddy Tribe could earn $25 million or more a year, based on projections from the revenue during the first two months. How that money will be used by the tribe has not yet been decided.

In addition, the legislature is considering three bills to expand tribal gaming, including through casinos, internet gaming and electronic Beano machines.

The fate of those bills, though, is uncertain, with Governor Janet Mills having vetoed a tribal casino bill in 2021.

The tribes have been unsuccessful in their efforts for a casino in the state for over 30 years, while two non-tribal casinos have been approved.

Following the governor’s veto in 2021, a year later in May 2022 Maine’s sports betting law was enacted, giving the tribes in the state exclusive access to mobile gaming rights.

With sports betting beginning last November, DraftKings, a digital sports entertainment and gaming company based in Boston, generated by far the most online sports betting revenue during the first two months, with more than $65 million in gross receipts, which is four times as much as Caesars Sportsbook Maine.

Caesars, which is partnering with the Penobscot Nation, the Houlton Band of Maliseets and the Mi’kmaq Nation, reeled in just over $16 million during that period.

However, the winnings paid to players amounted to $15.4 million, or 95% of gross receipts, for Caesars, while for DraftKings the winnings paid to players totaled $57.2 million, or only 86.8% of the gross receipts.

Under a revenue-sharing agreement, the Passamaquoddy Tribe retains 49.75% of the adjusted gross receipts, with DraftKings keeping 40%, the state 10% and the federal tax being 0.25%. Thus for the first two months the tribe’s share is $4.16 million.

If that trend continues for the first year, the tribe would receive just under $25 million for the two reservations at Sipayik and Indian Township. In 2018 the total tribal government budget at Sipayik was about $14 million.

For comparison, the two casinos in Maine had a net gaming revenue of $165 million in 2022, with a percentage of those funds, amounting to $68 million, distributed to the state, gambling addiction services and other entities according to a formula spelled out in state law.

The Passamaquoddy and Penobscot tribal governments receive 4% of the net slot machine revenue from the Oxford Casino, which in 2022 amounted to just under $3.6 million.

For online sports betting, Maine’s tax revenue, which is 10% of the adjusted gross receipts, or nearly $837,000 from the DraftKings partnership for the first two months and just over $65,000 from the Caesars partnership, goes toward a number of specified state programs, including the state government’s general fund and a gambling addiction prevention and treatment fund.

During the first year of operation state tax revenue is expected to be between $3.8 and $6.9 million, according to Milton Champion, executive director of the Maine Gambling Control Unit. He said the revenues during the first two months of online sports betting have been “in line with projections.”

While declining to answer a number of questions about its Maine operation, DraftKings indicated in a statement that it is “happy with how the early innings in Maine have been thus far.” The Passamaquoddy chief at Sipayik, Amkuwiposohehs Bassett, did not respond to requests for information about the tribe’s online sports betting revenues.

In a January 16 letter to Sipayik citizens of the tribe, though, he wrote, “I know there are some questions surrounding how the profits will be shared and spent. You must know, not one dollar has been touched when it comes to the profits earmarked for the tribe. This is a joint venture with Indian Township, and we are both holders of the license for sports wagering. There has been no decision on how to share the revenue that is generated from this.”

He noted a joint tribal council meeting may be held in the next few weeks to discuss the profit sharing, adding that the details about the revenue “will not be shared publicly,” as they are internal tribal matters.

While the DraftKings partnership is proving profitable for the Passamaquoddy Tribe, the company has been facing some legal issues. According to the Boston Globe, DraftKings has been sued multiple times, agreeing to pay $8 million in 2021 to settle lawsuits concerning misleading advertising. Also, late last year a class action lawsuit was filed in Massachusetts against DraftKings for its allegedly misleading bonus bet advertising.

Bill proposals considered

The three tribal gaming bills, which were carried over from the last session, were the topic of a hearing before the legislature’s Veterans and Legal Affairs Committee on January 3 and 10. 

LD 1944 would require the state to negotiate with any tribe in Maine that wishes to operate a casino on tribal land, except for Oxford and Penobscot counties, where the two existing casinos are located.

Rep. Ben Collings of Portland, the bill’s sponsor, noted that, unlike in Maine, across the country tribes have been given exclusive rights to gaming on their lands, and while the tribes in Maine now have sports betting revenue he noted that alone “does not bring in enough revenue to help the tribes in the manner in which they should be able to take care of all the issues they need to take care of.”

He added that the state is depriving the tribes of their right “to take care of their communities” and also depriving “local counties around these tribes to prosper.”

Penobscot Nation Ambassador Maulian Bryant noted that gaming “is not seen in our communities as the end-all be-all for economic development” but is “an important piece of the tribal sovereignty equation.” 

However, Lisa Montgomery, a former Penobscot Nation tribal councillor, was opposed to all of the gaming bills, stating there had been no consultation with tribal members about the proposals and alleging that “there were efforts to keep me from accessing information while I was a tribal council member.”

When the Penobscot high-stakes bingo operation closed in 2017 because of competition from the Bangor casino, the tribal business was losing money, she said, alleging that there was a lack of accountability with the tribe’s operation and that “basic business principles are not something our leadership has.”

Representatives for the Oxford and Bangor casinos also spoke in opposition, with Chris Jackson, representing Hollywood Casino, stating, “There is a limited pool of gaming dollars we’re competing for.”

Matthew Gallagher of Oxford Casino stated that Maine residents have shown, either through the legislature or in statewide referendums, that they do not want an expansion of gaming in the state. Polls also have indicated that residents support a statewide vote for approval of any new casinos.

But Corey Hinton, an attorney for the Passamaquoddy Tribe, pointed out that in previous statewide referendums on tribal casinos the two existing casinos “have spent millions” to fight them.

As for a proposal that any new casino not be allowed within a 100-mile radius around each of the existing casinos, Hinton noted that “would put you in the far reaches of the state” where it would be challenging to maintain a gaming operation. The tribe’s attorney did propose amendments to the bills so that the two Passamaquoddy reservations could be permitted to be licensed independently from each other.

Hinton also pointed to socio-economic statistics that show how much lower the per capita income rates and how much higher the poverty and unemployment rates are on the reservations compared to the rest of the state.

Passamaquoddy Rep. Aaron Dana noted that the tribes “are trying to keep our revenues within the state,” unlike the two existing casinos, which Hinton said “have been exporting tens of millions of dollars every year to out-of-state corporations.”

Rep. Dana commented, “We want to have the same opportunities in the American dream and in the Maine dream that all other citizens have.” 

Passamaquoddy Chief William Nicholas of Indian Township noted that the tribe still operates at that reservation a high-stakes bingo facility, which draws 400 to 500 people every two or three months and helps subsidize the tribal government’s assistance for the elderly and youth in the community.

All efforts by the tribes for a casino in Maine have been turned down over the past three decades, either in the legislature or statewide votes or by veto of the governor, with the Passamaquoddy Tribe having pursued the establishment of a casino since 1992.

As for the bill to allow the tribes to operate internet gaming, sponsored by Rep. Laura Supica of Bangor, Hinton explained that the current mobile sports wagering that the tribes are now offering in the state is only a portion of what Internet gaming can offer. “It’s more like an internet casino” that one can play online, he said of iGaming.

The bill was opposed by Steve Silver, chair of the Maine Gambling Control Board, who noted several issues, including loss of revenue for the 19 entities that receive funds through the taxes on the two casinos in Maine.

He also pointed out that iGaming, like sports wagering, does not create any local jobs, while the two existing casinos employ nearly 1,000 Mainers. And Silver stated that internet gaming will increase gambling addiction in the state, with Connecticut seeing a doubling of calls to its problem gambling with the legalization of sports wagering and iGaming.

The third bill, LD 1992, would legalize historical horse racing machines and electronic Beano at licensed gaming facilities and for the tribes in the state. The bill was supported by the Maine Harness Horsemen’s Association, as historical horse racing machines have been credited with reviving struggling racetracks in other states.

The two casinos opposed the measure, with Matthew Gallagher of Oxford Casino noting that the machines are “just slot machines,” which the two casinos already operate. He said the state does not have the demand for other facilities to operate slot machines.

The committee will be holding work sessions on the three bills in the coming weeks.

This story was originally published by the Quoddy Tides, and is republished here with permission.

Edward French, Quoddy Tides

Edward French is the editor and publisher of The Quoddy Tides, a twice a month newspaper founded by his mother Winifred French in 1968. The Quoddy Tides, based in Eastport, is the most easterly newspaper published in the United States and covers eastern Washington County, Maine, and western Charlotte County, New Brunswick, including the Fundy Isles.
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